When you can retire
Under current legislation, you can take your retirement savings anytime from age 55. If you are thinking about when to retire you’ll have lots to consider, including:
- How long you may need your retirement savings to last;
- When you are eligible for a State Pension; and
- How you want to spend your retirement savings.
The earlier you retire, the longer your money will need to last. It’s important to remember that your retirement savings might have to last for 30 years. Based on Office for National Statistics data, a 65-year-old man has a 50% chance of living to 87, and a 65-year-old woman has a 50% chance of living to 90.
Through your LifeSight Account you can access the ageOmeter. This tool will help you work out when you can afford to retire, and what changes you can make now to achieve your preferred retirement date.
At age 55
Access Pension Wise, the free and impartial guidance service provided by the Government. It is available to help you understand the different options you have when accessing your LifeSight pension savings.Visit Pension Wise
Six months before your retirement date
LifeSight works with HUB Financial Solutions to provide a comprehensive service to help you understand your options and make informed decisions about your retirement. Call HUB’s free Helpdesk on 0345 863 0495.
Three months before your retirement date
Confirm your chosen option to the LifeSight Team and begin preparing for your retirement.
In LifeSight, you will have access to the full range of retirement options without having to move your funds. You will also have access to free retirement guidance from HUB Financial Solutions.
When it comes to taking your retirement savings, you have three main options to choose from:
With this option, you cash in all of your investments at once and take the total value of your Account at your retirement date. However, it is worth bearing in mind that only 25% of the money you take is tax-free. The rest is taxed at normal income tax rates – this could range from 20% up to 45% depending on your total income in the tax year when you take all of your retirement savings as cash.
You can take chunks of cash (subject to tax) from your Account and leave the rest invested until you need it. As with the Cash option, you may need to manage your savings carefully to be sure you don’t run out of money. Drawdown enables you to spread withdrawals from your retirement savings over multiple years, meaning you can take advantage of annual tax allowances. However, as with cash, only the first 25% of your retirement savings can be taken tax-free. After that you pay tax at your marginal income tax rate.
You can choose whether to take the full 25% out as tax-free cash in one go or spread it across multiple withdrawals.
On your death, any money that you have not drawn down will be available as inheritance for your loved ones.
Be aware that if you take any money out under the drawdown option but also continue to save into a pension, you will be subject to the Money Purchase Annual Allowance for any future pension savings.
You can buy an annuity from an insurance company. The insurers will look at how much you have saved for retirement and make an assessment, based on your lifestyle and health, of how long you need that money to last. The insurance company will then take your retirement savings and pay you a regular pension for the rest of your life. This option ensures your money will last until you die. However, your pension payments may be lower than if you managed the money yourself through one of the other options. It is worth noting that if you opt for a single annuity and die soon after retirement any unused money will be kept by the insurance company. No money will be paid to your spouse, family or other inheritance beneficiaries.
You can take up to 25% of your Account free of tax. However, the more you take as a lump sum, the less you’ll have left to draw down from or to buy an annuity.
Making a decision
If you’re unsure what to do, you can:
- Read LifeSight’s Your options at retirement
- Get help understanding your options at Pension Wise
- Contact an Independent Financial Adviser in your area at unbiased.co.uk
- Access your free session with HUB financial solutions (HUB). LifeSight will send you information about HUB once you are approaching your retirement.
If you are ready to retire
If you are planning your retirement please contact LifeSight to find out more about accessing your retirement savings.